Line-In Splitter question

I changed from the Edirol sounds card (a few posts below) to a Creative Live External sound card. This sound card has a Line-In (as expected) in as a headphone jack. I have my XM radio being one input to the system using a headphone jack to rca adapter. This works just fine When I did the initial "install" of this I was testing using my mp3 player as input through just the headphone in/out. This also worked fine.

I tested this but when I tried to listen to my Mp3 player I also heard the XM coming though. I thought I saw a setting under Satellite Radio "To Always send mute signal" but was unsure how this worked. Any insight on this would be greatly appreciated.

BTW I'm using a Microsoft Zune hence not asking about the iPod in the music section. I would also like to be able to allow any of my friends w/ iPods or other msuic devices to hook up.